Ohio High Court Again Overturns Finance System

Ohio's system for financing its schools is still broken and must be
fixed within the next 12 months, the state supreme court ruled last
week in its second such decision in three years.

The state has made some progress on the issue since 1997, but has
failed to take sufficient steps to ensure its children have adequate
access to a "thorough and efficient" education, as guaranteed by the
state constitution, the court concluded in a 4-3 decision handed down
May 11.

"We acknowledge the effort that has been made, and that a good-faith
attempt to comply with the constitutional requirements has been
mounted," Justice Alice Robie Resnick wrote in the majority opinion.
"But even more is required."

The news was a setback to the Republican-controlled legislature and
GOP Gov. Bob Taft, who had hoped that recent increases in state
education spending—particularly for facilities
improvements—would satisfy the court. But late last week, those
representing the plaintiffs in the case, known as DeRolph v.
State of Ohio, said the decision upheld their view that the
state's efforts have fallen far short of the mark.

"What they've done is put a veneer panel on a decaying structure,"
said William L. Phillis, the executive director of the Ohio Coalition
for Equity and Adequacy in School Funding, which brought the lawsuit on
behalf of more than 500 school districts. "They've merely finessed and
tweaked the old system, rather than giving it a complete, systematic
overhaul."

Not Enough Money

Last week's ruling extends for at least another year a battle that
has already occupied Ohio's state policymakers and education leaders
for nearly a decade.

The first decision in the case, which was filed in 1991, came in
1994 when a state trial court judge sided with the plaintiffs. The suit
worked its way up to the Ohio Supreme Court, which three years ago
agreed that the school funding system failed to pass constitutional
muster. ("Justices Reject Ohio System
of School Finance," April 2, 1997.)

In that ruling, the justices lambasted the condition of many of the
state's school buildings. A 1996 U.S. General Accounting Office survey
found that Ohio students were more likely to attend unsafe or
inadequate schools than those in any other state.

Since the 1997 ruling, state officials have engaged in an
often-fierce struggle to craft a politically palatable remedy. In 1998,
then-Gov. George V. Voinovich supported a state ballot initiative that
would have raised more than $500 million for the state's schools
through a 1-cent sales-tax increase. But voters overwhelmingly rejected
the measure.

More recently, Gov. Taft proposed legislation that would direct
$10.2 billion in state funds toward school repair and construction over
the next 12 years. Much of the money for that plan would come from
Ohio's share of the multistate settlement with the nation's tobacco
companies. The state also hiked its per- pupil aid to local
districts.

While acknowledging those strides, the state supreme court said last
week that the state had yet to fundamentally change the way it pays for
its schools.

"The decision does recognize that the governor and the General
Assembly have put considerable resources into our facilities," said
John M. Brandt, the executive director of the Ohio School Boards
Association. "But it isn't just that we need more money; the mechanism
itself needs to be fixed."

In particular, the justices criticized state officials for failing
to address the funding system's heavy reliance on local property taxes,
which critics argue creates unfair disparities between rich and poor
communities.

Further, the court held that the state had yet to abandon completely
the allocation of school aid according to the funds available—a
practice known as "residual budgeting"—in favor of a system that
is based on an estimate of the actual cost of a "thorough and
efficient" education. Although the state hired a school finance expert
after the 1997 ruling to calculate such a figure, the court in its new
ruling said that state lawmakers later ratcheted down the amount.

"Instead of determining how much does it cost and then pulling
together a reservoir of funds," Mr. Phillis said, "they begin with the
pool of money and determine how much that will pay for. It's putting
the proverbial cart before the horse."

Adequacy Push Growing

Some analysts saw last week's decision as a reflection of the
growing willingness of state courts to demand not just that schools be
subsidized equitably, but that overall funding be sufficient to provide
access to a high-quality education. In 1995, for example, the Wyoming
Supreme Court declared its state's finance system unconstitutional and
directed that lawmakers remedy the problem by first determining what a
"complete, proper, and quality education" would cost.

"I'd say that three-fourths of the finance cases in the past five or
six years have been adequacy cases," said Allan Odden, a school finance
expert at the University of Wisconsin-Madison. "The courts are moving
beyond whether or not the money is distributed fairly. They want to
know whether there is enough money."

Mr. Odden attributes the trend, in part, to states' recent efforts
to set higher standards for student performance. As states become more
clear about the achievement they expect from students, he said, courts
have become more interested in probing the question of whether
legislatures are providing schools with the needed financial resources
to meet those standards.

In last week's ruling, the Ohio high court did not go along with the
plaintiffs' request to name a special master to oversee the design of a
remedy. But the justices did retain jurisdiction in the case, unlike in
1997, when the high court sent it back to a lower court. So a year from
now, Ohio officials will have to again appear before the supreme court
to make the case that they have followed through with its order.

Gov. Taft remained upbeat about the ruling last week. At a press
conference on Friday, he said he was optimistic that lawmakers could
craft a satisfactory remedy in time.

"The state has turned the corner in its efforts to meet the court's
mandate," he said. "By giving the state an extra year to finish its
work and by not appointing a special master, the court is recognizing
that we are on the right track."

Leaders of the Ohio Senate and House of Representatives planned to
start appointing a joint committee this week to begin studying the
decision. The legislature is slated to go into recess at the end of
this month, but lawmakers said they haven't ruled out coming back for a
special session during the summer to address the ruling.

Last week, Speaker of the House Jo An Davidson predicted that
dealing with the property-tax issue will be the toughest challenge.

"The best method I know for addressing property-tax disparities is
what we already do in our foundation formula, which is to equalize
funding," she said in an interview. Asked just how difficult the
problem will be to solve, she said: "On a scale of 1 to 10, I'd say
it's a 12."

Vol. 19, Issue 36, Pages 1, 25

Published in Print: May 17, 2000, as Ohio High Court Again Overturns Finance System

The College of Education at Illinois University provides a school
finance "boxscore" page, "Status of School Finance
Constitutional Litigation." School districts and systems in several
states have sued for higher funding, citing implicit or explicit
funding guarantees in their state constitutions.

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